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CA Department of Insurance
CA Department of Insurance
CA Department of Insurance

Fraud Division's History

CDI Fraud Staff

Today's Fraud Division has its roots in the California State Bureau of Fraudulent Claims which was established in 1979.  When the Bureau first opened its doors in May of that year, it had three offices (Sacramento, San Francisco, and Los Angeles) and was staffed with only a chief and five investigators.  In 1980, Bureau of Fraudulent Claims Investigators became sworn peace officers under Section 830.3 of the California Penal Code.  In 1988, the Bureau grew within the Department of Insurance and was reclassified as the Fraud Division.

Unlike most California state agencies whose budgets are derived from the general fund, the Fraud Division's funding is primarily secured from assessments on insurance policies issued in the State.  For example, in January 1988, the Automobile Insurance Claim Act was enacted to procure a $1 assessment from every auto insurance policy issued to fund Auto Insurance Fraud investigations.  In 1991, State Senate Bill 1218 assigned the Fraud Division with the task of conducting criminal investigations involving Workers' Compensation Insurance Fraud.

In 1991 we also saw the swearing in of John Garamendi as the first elected official to hold the position of Insurance Commissioner.

October of 1999 saw the passage of Assembly Bill 1050 which created the Organized Automobile Fraud Activity Interdiction Program.  This program allocates resources so that the Fraud Division, the California Highway Patrol, and various district attorneys throughout the state work together in a task force setting to investigate organized automobile insurance fraud rings. This program has been very successful in identifying, investigating, and prosecuting organized insurance rings in California.  During fiscal year 2015-16, the Fraud Division assigned 145 new cases and made 176 arrests and 109 referrals to prosecuting authorities. Potential loss amounted to $1,078,806.

In addition, this pooling of manpower and expertise among the various agencies has identified strategies to aggressively deter fraudulent behavior and penalize crimes associated with, (but not limited to): fake automobile insurance identification, staged accidents, undisclosed drivers, and false damage and/or injury claims.

Fiscal year 2004-05 saw the creation of the Healthcare and Disability Insurance Fraud Program which focuses on the suspected billions of dollars lost due to health care fraudulent activity. During fiscal year 2015-16, the Fraud Division identified and reported 624 SFCs, assigned 68 new cases, and made 17 arrests and 19 referrals to prosecuting authorities. Potential loss amounted to $174,217,415.

Today, the Fraud Division celebrates over 35 years as being the premiere insurance fraud investigative agency in the nation with over 230 sworn officers operating in nine regional offices throughout the State of California.

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